Warren Buffett and his company Berkshire Hathaway have been closely watched by investors for any signs of their next market moves. The recent filing of Berkshire’s Q2 2024 13F revealed some surprising changes, with the most notable being a significant reduction in their Apple (NASDAQ:AAPL) holdings. This shift has left many speculating about the company’s strategy going forward.
Earlier this year, Berkshire’s portfolio was valued at over $400 billion. However, following the sale of nearly half its Apple stock, the portfolio’s value dropped to $317 billion from $280 billion at the end of June. This move increased Berkshire’s cash reserves to an unprecedented $277 billion, indicating a possible strategic shift or preparation for future opportunities.
This isn’t the first time Buffett has made unexpected decisions. Previous years have shown a pattern of surprising sales and purchases, such as the acquisition of technology stocks like Apple and Amazon (NASDAQ:AMZN), which deviated from his traditional value investing approach. The current sell-off and new investments suggest a blend of maintaining classic investment principles while exploring new avenues.
New Additions and Increases
Berkshire Hathaway’s Q2 2024 filing revealed two new additions to its portfolio: Ulta Beauty and Heico. Both acquisitions surprised market analysts given Buffett’s typical reluctance towards retail investments. Additionally, Berkshire increased its stakes in five existing companies, including Occidental Petroleum and Chubb, which are among its top holdings.
Ulta Beauty’s inclusion in Berkshire’s portfolio marks a rare foray into the retail sector, a domain Buffett traditionally finds challenging. Ulta, alongside Sephora, dominates the beauty retail market in the U.S., and its strong revenue projections make it a compelling investment. Despite Buffett’s past comments about the retail industry’s difficulties, the strategic move by one of his managers suggests confidence in Ulta’s long-term growth.
Strategic Moves in Aerospace and Energy
Heico, a company specializing in aerospace technology, aligns more closely with Buffett’s historical investment patterns. With a consistent increase in its Flight Support Group’s revenue over 16 consecutive quarters, Heico presents a robust growth opportunity. The company’s modest dividend yield and solid financial performance make it a steady addition to Berkshire’s portfolio.
Berkshire’s longstanding relationship with Occidental Petroleum continues to evolve. The company’s initial $10 billion investment in Occidental during its acquisition of Anadarko Petroleum has grown to a substantial stake, making it one of Berkshire’s largest positions. Recent increases in Occidental shares demonstrate Buffett’s enduring confidence in the energy sector despite fluctuating market conditions.
Berkshire’s strategic adjustments indicate a balanced approach to maintaining its portfolio’s strength while seizing new opportunities. The reduction in Apple holdings and the diversification into new sectors reflect an adaptive investment strategy catering to evolving market dynamics. This blend of caution and calculated risk aligns with Buffett’s long-term investment philosophy, ensuring sustained growth and stability.
